Clinton, Zedillo Toast Mexico Success

Critics Call Economy's Recovery A Shell Game Despite Loan Payment

October 11, 1995|By Frank James, Washington Bureau.

WASHINGTON — President Clinton on Tuesday welcomed Mexican President Ernesto Zedillo Ponce de Leon to the White House and showcased what he considers a major, if unfinished, foreign policy success: the $12.5 billion bailout of the Mexican economy.

At each other's side through much of the day, the two leaders sought to underscore the importance of ties between North America's most populous nations in an attempt to counter isolationist and anti-immigrant themes in current U.S. public debate.

The summit also gave the presidents an opportunity to discuss issues of strong mutual interest: the North American Free Trade Agreement, the war on drug trafficking and immigration.

After expressing concern for the victims of Monday's earthquake in western Mexico, Clinton addressed Zedillo with words also meant for U.S. consumption during a sun-drenched ceremony on the South Lawn.

"We know we share a stake in your success," Clinton said. "That is why when Mexico fell into financial crisis, the U.S answered with action, not only for the sake of the American people, but also for the sake of thousands of Americans whose jobs depend on Mexico's well-being."

Zedillo, 43, a Yale University-trained economist, responded that Mexico, which is in a deep recession brought on by the strict economic measures he had to impose, is on the upswing.

"Today, I can assure you that thanks to the adjustment program, to the support of our friends and trade partners, especially the U.S., and above all, thanks to the firmness of work of all our Mexicans, we are turning the corner," Zedillo said.

"Through our efforts and determination, we are establishing strong foundations so that next year we will have an evident and sustained economic recovery."

Zedillo's tough economic measures - including higher taxes and a tight rein on the nation's money supply - have hurt many Mexican families and made him unpopular.

In the first few weeks of his presidency last December, the value of the Mexican peso collapsed after international investors lost confidence. Short of money to repay its debts, the country urgently needed help.

The Clinton administration, despite critics in Congress and elsewhere who warned that the money might not be repaid, loaned Mexico $12.5 billion out of Treasury Department funds.

Last week, the Zedillo government said it would make an early repayment of $700 million of that loan. The Clinton administration has ballyhooed that as proof its gamble on Mexico is paying off.

"We overcame tough challenges by making tough decisions and by standing together and standing firm for the long-term best interests of both our nations," Clinton said.

Critics of the loan package found little to cheer, however.

"It's just a shell game," said Ian Vasquez, a global finance analyst at the Cato Institute, a libertarian think tank in Washington.

The Mexicans "used borrowed money to pay back money that they borrowed," Vasquez said. "It's not so impressive and I'm not so sure investors have been fooled by this."

It was Zedillo's first White House visit since becoming Mexico's president and he received all the pomp and circumstance reserved for heads of state.

A 21-gun salute was the climax of the South Lawn ceremony, which included energetic grade-school students waving miniature U.S. and Mexican flags. Zedillo was the guest of honor at a state dinner Tuesday evening.

The summit meeting, part of Zedillo's three-day visit to the U.S., also gave the two presidents an opportunity to praise NAFTA. Critics say the pact so far has failed to create a sufficient number of jobs on either side of the border.

"NAFTA is a reality, and it is yielding impressive results," said Zedillo. "Even in this difficult year, Mexico now purchases nearly four times more goods and services from the U.S. than it did 10 years ago."

Regarding illegal drugs, Clinton acknowledged that lowering the number of drug users in the U.S. would go a long way toward reducing drug trafficking problems in Mexico and other Latin American nations.

"I think it is a legitimate thing for countries, other countries, to ask the U.S. to do more to reduce its demand for drugs, " Clinton said.